Impact of Corruption on Firm-Level Export Decisions

William Olney

No 2013-04, Department of Economics Working Papers from Department of Economics, Williams College

Abstract: This paper examines the impact of corruption on the self-selection of firms into domestic and export markets. A heterogeneous firm model predicts that corruption decreases the probability that a firm only sells domestically, increases the probability that a firm exports indirectly through an intermediary, and decreases the probability that a firm exports directly. The propositions of the model are tested using a comprehensive data set of over 23,000 firms in 80 developing countries. The results confirm both the self-selection of firms according to their productivity and the anticipated impact of corruption. This indicates that in developing countries where corruption is especially severe, intermediaries provide a crucial link to global markets.

Keywords: Corruption; Exports; Intermediaries (search for similar items in EconPapers)
JEL-codes: F1 O1 (search for similar items in EconPapers)
Pages: 45 pages
Date: 2013-07, Revised 2015-01
New Economics Papers: this item is included in nep-ifn, nep-int and nep-pol
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Journal Article: IMPACT OF CORRUPTION ON FIRM-LEVEL EXPORT DECISIONS (2016)
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